Global Private Equity giants, leading real estate developers, policy makers and eminent professionals came together to discuss ways and means of funding the real estate business as a whole and meet the vision of ‘housing for all’ by 2022 in particular with many innovative suggestions.
The 2-day high level Real Estate and Infrastructure Investors’ Summit 2015 organised by NAREDCO in association with APREA-Asia Pacific Real Estate Association saw a very intense level of discussion on how to fund the real estate projects so that Smart Cities, Affordable Housing and housing for all become reality in the minimum time frame.
Articulating the Maharashtra state government’s view, Shri Sudhir Mungantiwar, Minister of finance and planning, and forest departments who was the chief guest mentioned that the ‘single window’ clearance is the priority of the government and the developers will receive faster clearance resulting in quicker delivery and at reduced cost. People should invest in Real Estate and developer community should execute projects with seriousness which is time bound, the minister added.
In his key-note address, Mr. Sunil Mantri, Chairman NAREDCO and Chairman Mantri Realty Ltd., observed that the foreign funding was need of the hour to meet the long term capital requirements and the real estate sector will have to source funding from both private equity players and non-banking finance companies (NBFCs).
Mr. Peter Verwer, Chief Executive Officer, Asia Pacific Real Estate Association ( APREA), observed that sustainable growth requires coming together of all the stakeholders like developers, governments and others. Enhancing Productivity too would result in greater growth, he stated.
Mr. Keki Mistry, Vice Chairman & CEO of Housing Development Finance Corporation ( HDFC) said that opening of FDI should be concentrated on affordable housing, digital India, smart cities so that enough housing stock is created across India. He also emphasised that REITS will play an important role for developers in the coming years. This is the opportune time for investment in India, Mr Mistry added.
In a video communication, Mr Prakash Javdekar, Minister for Environment and Forests observed that investment in real estate actually creates employment in 42 sectors and real estate sector should take ownership of affordable housing. He also underlined the importance of investment by private sector as has been observed by the finance minister.
Mr Neeraj Bansal, Head and Partner, Real Estate and Construction, KPMG in India said, “Investment trends across the Indian real estate market suggest that the sector is well-positioned to witness growth in coming years. Decisive political mandate, declining fiscal deficit and stricter monetary policy stand has led to improvement in sentiments of the overseas investors. Encouraged by strong fundamentals of the Indian economy, foreign investors have started looking at the sector with hope.”
“With the influx of pension and sovereign funds, investments in the Indian real estate sector rose sharply in the first eight months of 2015. Domestic and overseas funds have committed or invested around USD3.2 billion across 54 deals compared to USD1.3 billion across 35 deals in the same period last year. Further, the institutional investors (FIIs) touched a record high with FIIs having invested USD 46 billion in FY 2015, which is ~5.3 times the investments made in FY2014 (USD9 billion).”
Mr. Amit Goenka – MD & CEO Nisus Finance stated – It is encouraging to note that global investors like Ascendas , KKR, Mapletree, Standard Chartered and others shared their confidence and interest in the long term India Real Estate Story. Notably they have exerted Indian Investors and consumers to repose greater faith and stay put with the sector. It is evident that the surge of capital will continue backing strong asset classes like affordable housing and commercial spaces. However developers need to gear their systems to receive this capital support, consolidate and create a larger leadership position. It also seems imperative that REITs will be launched in the near future.
The two day summit will include panel discussions, debates and presentations on various topics such as Foreign and FDI Investors – Opportunities and Challenges for investing in Real Estate in India, InvITs and REITs – Challenges for the Indian market and learning’s from the other markets, Impact of global economies on India and how India compares as an investment destination, Real Estate in India – Equity and Debt markets, Innovative Financing – Meeting capital needs through investment structures of equity, debt, mezzanine, inventory and other mechanisms etc.
Private Equity has emerged as a major funding channel for the realty sector since the past decade. Post the global crisis of 2008, banks and central bank have taken a hawkish view on real estate, construction and infrastructure credit, slowing down capital availability. Development companies have taken recourse to private equity, NBFCs and other private capital taps to fuel demand and keep up the growth trajectory.
The year 2015 has seen a sharp spur in PE investments on the back of government initiatives for growth of the housing and infrastructure sectors. Targeting the positive market outlook, USD 3,222 million was committed or invested by domestic and offshore PE, pension and sovereign funds in the first eight months of 2015, an increase of 2.5 times from the same period a year ago.
There is a substantial need of private equity injection into the realty sector on back of Government’s vision for “Housing for All by 2022”, to supplement India’s consumption and growth story through the real estate sector. The need for attracting more funding with a view to meet the gigantic task of fulfilling the need of housing for every Indian can be facilitated with large inflow of private equity capital.
The government has initiated several reforms in the recent past including relaxation of FDI norms, focus on affordable housing, establishment of REITs and set-up of development corridors and smart cities.
In light of the above, the two day Real Estate & Infrastructure Investors’ Summit will primarily discuss issues concerning policy initiatives and foreign investment norms, significant opportunities and challenges that the real estate sector presents, key investment themes prevalent in the real estate sector and India’s standing as a global investment destination.